MONTREAL — The parent company of loyalty card Aeroplan saw its shares plummet for a second day Friday after DBRS warned about a possible downgrade after it announced the sale of its Nectar business at a substantial loss.
Shares of Aimia Inc. fell more than 22 per cent to $2.16 in morning trading on the Toronto Stock Exchange after losing 25 per cent on Thursday.
Aimia sold Nectar to British retailer Sainsbury, which was a founding partner of the program in 2002, for $105 million. The Montreal-based company purchased Nectar in 2007 for about $755 million.
It is the largest part of Aimia’s international coalitions segment, generating a quarter of the company’s gross billings and 29 per cent of its adjusted EBITDA.
Aimia says the sale of Nectar will allow it to focus on Aeroplan, its largest and most profitable business, and simplify its operations.
The company has been working to prepare for the end of its agreement with Air Canada.
The airline served notice last year that it does not plan to renew its 30-plus year partnership when the current contract ends in 2020.
DBRS Rating Services says the transaction weakens Aimia’s business risk profile because of the impact on its size and geographic diversification even though its total debt will be more manageable from using proceeds to repay $100 million of debt.
DBRS says it will continue to monitor Aimia’s performance but warned a downgrade could result if mileage accumulation decreases and redemptions accelerate more than it expects.
Companies in this story: (TSX:AIM, TSX:AC)
The Canadian Press